Vacancy Allowance - Posted by LT (MI)

Real Estate Investing
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Posted by BrokerScott (Mich) on March 01, 2003 at 07:38:57:

Vacancy allowance is usually figured by the year, and expresed as a percentage. For instance you have an average of 1 month vancancy per year - 335 divided by 365 = .92 or an 8% vacancy rate. Unfortuantly virtually every mortagage underwriter uses a percentage of 25%. Why? I have no idea. I speculate that they may take the worst case senario. My mortgage broker couldn’t give me an definate answer. So you may want to take that in consideration if you eventually go to convential fianancing.

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Vacancy Allowance - Posted by LT (MI)

Posted by LT (MI) on March 01, 2003 at 07:05:52:

Can anyone help me understand and figure out how to calulate the vancancy allowance? I came upon a property where the terms are good. The home is currently rented out for 925 p/mo under sec 8 and the tenents have a year lease on the property. When calulating the vancancy rate, do you go by the per month gross income or the entire year income? All help greatly appreciated.

Thanks in advance!!